The Adler Group is a sewn together and over-indebted heap of junk operated only for the benefit of a mysterious, kleptocratic cabal. ”The conclusions of the investment firm Viceroy's 61-page report on the real estate group, published on October 6, could hardly have been more devastating can. The market's reaction was just as dramatic: Adler's share price fell 30 percent that day and has not risen since then. The Adler real estate group, which is headquartered in Luxembourg and owns 70,000 apartments across Germany, has fully denied the allegations, but Viceroy's verdict remains unchanged: the real estate conglomerate is "not investable".
Viceroy's strategy works like this: the investment firm bets against publicly traded companies it believes are corrupt or poorly managed and then publishes the alleged irregularities.
The aim is to push the share price down.
The deeper Adler's stock goes, the more money Viceroy makes.
This practice, known as activist short selling, is legal - albeit controversial.
Critics point out the conflict of interest of these investors and argue that only innocent observers can be trusted to judge the correct value of stocks.
Activist short sellers counter this by bringing to light grievances in companies and allowing their words to be followed by deeds.
Viceroy is backed by a 48-year-old Englishman: Fraser Perring, a man who is not lacking in self-confidence.
He is certain that his research has uncovered problems in the German economic and regulatory establishment.
However, that was not his primary goal: "I'm here to make money, I'm not a charity," he told the FAZ during a lively telephone interview.
As if proof was still required, he said that he had just bought a BMW M5 as a birthday present.
With the purchase, he also wanted to celebrate the publication of his Adler report, he said.
Wirecard mixed up
Fraser Perring appeared on the German business scene on February 24, 2016 when he published a critical report on Wirecard together with British short seller Matthew Earl.
Back then, the German payment processor boasted rapid growth and a stock market valuation of more than five billion euros.
There were few critics at the time.
The small circle of critics included Dan McCrum from the Financial Times and short seller Anne Stevenson-Yang from J Capital Research.
The report by Perring and Earl, published through their company Zatarra Research & Investigations, implied Wirecard "widespread corruption and corporate fraud" and claimed that the stock was practically worthless.
The Wirecard share price fell 12 percent on that day.